US Stocks Close Up, But DJIA Ends Four-Week Win Streak

StevenRussolillo

NEW YORK (MarketWatch) -- U.S. stocks kicked off the fourth quarter on a positive note, rising modestly even as a string of economic reports, including key manufacturing data, yielded conflicting signals.

The Dow Jones Industrial Average closed up 42 points, or 0.4%, at 10830. But the blue-chip index fell 0.3% for the week and snapped its four-week winning streak. J.P. Morgan Chase was the Dow's top gainer, rising 2%. Bank of America gained 1.7%.

Hewlett-Packard fell 3.1% after the company appointed Leo Apotheker as its new chief executive. Apotheker, former SAP CEO, replaces Mark Hurd, who resigned last month amid a sexual-harassment investigation.

The Nasdaq Composite edged up 0.1% to 2371. The Standard & Poor's 500-stock index rose 0.4% to 1146, led by the energy and materials sectors. The index earlier climbed to as high as 1150. Traders noted that the S&P 500 in recent days has risen above that level but not decisively, which has added to the market's volatility.

"The fact that we got through a number of data points today without losing steam is a positive sign for the bullish camp," said Roger Volz, director at BGC Financial.

Friday's gains came after the Dow surged 7.7% last month -- its best September performance since 1939 -- and rallied 10.4% in the third quarter. It was the Dow's best quarterly performance in a year.

Volz noted that there are still two weeks before earnings season ramps up. "Then we'll see if the bulls go into a 'lets take some profits' mood or if they push this issue and make the sideline money pay the price," he said.

Trading was jittery after the Institute for Supply Management said the U.S. manufacturing sector expanded in September, but at a slower pace than in August.

The ISM's manufacturing purchasing managers index fell to 54.4 from 56.3 in August. Economists surveyed by Dow Jones Newswires had expected a reading of 54.0. Readings above 50 indicate expanding activity, and September was the 14th consecutive month of growth. But investors said certain details in the report triggered alarm about the economy's health.

"Some of the data points had a lot of weakness in the layers," said Seth Setrakian, partner and co-head of trading at First New York Securities, a proprietary trading firm. "Backlogs and new orders were down and inventories were way up, which portends declining economic growth in the next few quarters."

Investors also continued to stew over the possibility of the Federal Reserve taking further action to stimulate the economy.

Federal Reserve Bank of New York President William Dudley said that the central bank is almost certain to have to offer fresh support to ensure that already tepid economic growth doesn't falter any more, although he stopped short of saying what type of stimulus he prefers.

Still, further quantitative easing may not erase all the economy's problems, traders said. "At a certain point, people realize it's only going to have so much of an impact," Setrakian said. "The economic numbers are going to start to matter again."

Better-than-expected U.S. personal income and spending data as well as positive Chinese manufacturing figures also fueled Friday's moves. The Reuters/University of Michigan consumer sentiment index ticked up a bit in September.

Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Counsel, said next week's nonfarm payrolls report and the start to earnings season are the two major themes investors will watch closely to determine the market's future direction.

"A lot of people are just holding onto positions until some of that data starts coming out," Lazorishak said.

December gold futures rose and hit another all-time intra-day high. Crude-oil futures hit a seven-week high, while the U.S. dollar fell against other major currencies. The euro rose to a new six-month high and was recently trading at $1.3777, up from $1.3632 late Thursday in New York.

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